Wheeler v. TL Roofing, Inc.

• Citation: 74 P.3d 499
• Decision Date: 22 May 2003
• Docket Number: No. 02CA0713.,02CA0713.
• Parties: Ronald E. WHEELER, Plaintiff-Appellant, v. T.L. ROOFING, INC., Defendant-Appellee.
• Court: Court of Appeals of Colorado

74 P.3d 499

Ronald E. WHEELER, Plaintiff-Appellant, v. T.L. ROOFING, INC., Defendant-Appellee.

No. 02CA0713.

Colorado Court of Appeals, Div. I.

May 22, 2003.

Rehearing Denied July 3, 2003.

Shand, Newbold & Chapman, P.C., Paul W. Whistler, Durango, Colorado, for Plaintiff-Appellant.

Gregory & Golden Attorneys at Law, Daniel A. Gregory, Durango, Colorado, for Defendant-Appellee.

Opinion by Judge GRAHAM.

Plaintiff, Ronald E. Wheeler, appeals the trial court's order awarding attorney fees and costs to defendant, T.L. Roofing, Inc. We affirm and remand for an award of defendant's appellate attorney fees.

In January 1996, defendant, a subcontractor, entered into an agreement with plaintiff to construct a standing seam roof. The agreement contained a fee-shifting provision: "In the event of a breach of this agreement by either party, the breaching party shall pay all reasonable attorney's fees, collection fees and costs of the other party incident to any action brought to enforce this agreement."

Defendant's scope of work was limited to the installation of snap-lock, standing seam metal panels and certain flashing. Other subcontractors also performed work on the roof. Plaintiff acted as his own general contractor.

Defendant completed all work under the contract in March 1996. When plaintiff failed to pay for the work performed, defendant filed a lien against plaintiff's property and a small claims action seeking the amount due under the contract. In July 1996, the parties reached an agreement under which plaintiff would pay $600 per month for three months as a full and final settlement, commencing in August, and defendant would dismiss the lien and small claims action. The trial court determined that this settlement agreement was an executory accord.

Although defendant complied, in August 1996, plaintiff informed defendant that he would pay only if defendant completed additional work that was not part of the original contract. The cost of the additional work was $479.

In January 1997, plaintiff informed defendant that in October 1996 he noticed that the roof was leaking. Plaintiff asserted that the leak caused over $33,000 in damages, including the cost to remove and replace the roof.

Plaintiff filed a complaint against defendant alleging breach of contract, breach of an express and implied warranty, negligence, and deceptive trade practices. Plaintiff asserted that the roof leaked as a result of defendant's defective installation and poor workmanship.

Defendant filed a counterclaim alleging breach of contract for failure to pay and sought $1,922.76, the balance due under the original contract. Although defendant denied liability, it submitted a $10,000 statutory offer of settlement to settle any and all claims made by plaintiff. Plaintiff rejected the offer.

Before trial, the court dismissed plaintiff's negligence and deceptive trade practices claims on summary judgment.

The trial court found that there was no evidence to demonstrate that the leaks, or the repairs made, were the result of work performed by defendant, noting that defendant was only responsible for the installation of the metal roof panels and that it had no responsibility for the underlayment, which included the decking, ice and water shield, and felt. The court concluded that any defects in defendant's work were minor, did not cause the leak, and did not cause the complete removal of the old roof and installation of a new one. The court viewed this question as a fundamental issue in the case.

The court also determined that the installation method used by defendant complied with an acceptable standard for workmanship.

As to defendant's breach of contract counterclaim, the court found that plaintiff's insistence on the performance of additional work constituted a breach of the executory accord, and thus, defendant was entitled to make a claim under the original contract.

The court concluded that defendant performed its obligations under the contract, except for missing clips and some improperly snapped seams, and that plaintiff had breached the agreement.

The trial court then awarded defendant $2,401.76, which included $1,922.76 for the balance remaining under the original contract and $479.00 for the additional work that was outside the scope of the original contract.

The court found that defendant's minor breach related to materials and workmanship concerning "missing Z clips" and "seams on the roof which were not snapped properly" and awarded plaintiff $400, the cost of repair damages.

Both parties asserted that they were entitled to attorney fees under the fee-shifting clause of the parties' contract. Defendant also contended that it was entitled to attorney fees because plaintiff's negligence and deceptive trade practices claims were frivolous.

The trial court concluded that defendant was the prevailing party under the net judgment rule referred to in Dennis I. Spencer Contractor, Inc. v. City of Aurora, 884 P.2d 326, 331 n. 11 (Colo.1994), and was therefore entitled to recover attorney fees and costs. In so holding, the court determined that, although plaintiff alleged and proved breach by defendant of its warranty obligations, he did not prevail on his principal assertion that the breaches justified removing the roof and entirely replacing it.

The court thus determined that defendant was entitled to attorney fees and all costs incurred in defending plaintiff's claim for damages in removing and replacing the roof. However, the court noted that, because $479 of defendant's recovery was not pursuant to a contract with a fee-shifting provision, attorney fees could not be awarded for the work allocated to that claim.

The trial court also found that plaintiff's negligence and deceptive trade practices claims lacked substantial justification and awarded defendant attorney fees and costs for defending against these claims. Defendant was awarded $25,725 in attorney fees and $5,313.87 in costs. This appeal followed.

I. Fee-shifting Provision

Plaintiff contends that the trial court erred in finding that defendant was the prevailing party and entitled to attorney fees and costs under the net judgment rule. Plaintiff maintains that, because he succeeded on the merits of his claim for breach of warranty, he was entitled to an award of attorney fees and costs pursuant to the express language of the fee-shifting provision in the contract. We disagree.

A. Prevailing Party

We first reject the notion that the fee-shifting provision here somehow barred the trial court from determining who was the prevailing party.

Plaintiff suggests that the fee-shifting provision is couched in terms of "breaching," as opposed to "prevailing," and therefore the court erred in finding that defendant prevailed. However, both parties and the court treated the provision as one that shifted the risk of incurring fees to the losing party. In this litigation, the parties indicated no practical difference between the concepts of awarding fees against a breaching party and awarding fees to the prevailing party.

Plaintiff's trial briefs argued that "[he] had established liability" and "that attorney's fees are recoverable by the party who prevails on liability." In that same vein, defendant urged in its trial brief that it had "prevailed" and that "plaintiff cannot be considered a prevailing party." We decline to give the contract an interpretation different from that given by the parties in the trial court. See Fire Ins. Exch. v. Rael, 895 P.2d 1139 (Colo. App.1995)

.

B. Attorney Fees

We also reject plaintiff's contention that there can be two prevailing parties where both parties breach the contract.

In the absence of a specific statute, court rule, or contract provision to the contrary, attorney fees are not recoverable by a prevailing party in a contract or tort action. Bernhard v. Farmers Ins. Exch., 915 P.2d 1285 (Colo.1996); Grynberg v. Agri Tech, Inc., 985 P.2d 59 (Colo.App.1999), aff'd, 10 P.3d 1267 (Colo.2000).

Fee-shifting provisions are expressly designed to reject the otherwise applicable rule that the losing party does not have to pay the winner's attorney fees. This contractual balancing is not intended to result in each side paying the other's fees. Instead, these provisions generally contemplate that the prevailing party will be entitled to recover its attorney fees and that there will be one winner and one loser regarding payment of those fees. However, we recognize that, in a proper case, the trial court may rule that neither party prevailed and award no fees. See Dennis I. Spencer Contractor, Inc. v. City of Aurora, supra

(under contractual fee-shifting provision, a party in whose favor the decision is rendered is the prevailing party).

We further conclude that the court did not abuse its discretion in applying a net judgment analysis to determine the prevailing party.

Here, the trial court awarded defendant attorney fees as the prevailing party under the holding of Dennis I. Spencer Contractor, Inc. v. City of Aurora, supra.

The determination of which party prevailed is committed to the discretion of the trial court and is subject to an abuse of discretion standard of review on appeal. Dennis I. Spencer Contractor, Inc. v. City of Aurora, supra, 884 P.2d at 328 n. 6 (citing Smith v. Freeman, 921 F.2d 1120, 1122 (10th Cir.1990)).

The Spencer Contractor court ruled that a party prevails if the issue of liability is resolved in its favor, even where damages are not awarded. There, the contract called for the contractor to build a sewer line. Unexpected delays and disputes over the contractor's role in those delays resulted in a settlement agreement, which Aurora breached. Although Aurora was successful in arguing that no damages resulted from its breach of the settlement agreement, the supreme court held that "awarding attorney fees to Aurora would effectively confer a benefit upon a party for violating its own agreement." Thus...